A synopsis of recent market activity, a look ahead, and putting it all in perspective

The markets had a very tranquil summer, with the S&P 500 going 43 days without having a 1% move (up or down). In an eagerly awaited Fed Meeting in September, the Federal Reserve once again voted to keep interest rates the same, seemingly not wanting to get in the way of the upcoming election in November.

Looking forward to Q4, History has shown that subdued periods often are followed by an increase in volatility and some weakness in returns. The upcoming election in November followed by a potential interest rate increase in December, certainly has the potential to increase volatility as markets do not like uncertainty.

Below is a link to an excellent article from July’s Money Magazine, which takes a good look at “The Election and Your Investments”.

http://time.com/money/page/2016-presidential-election-clinton-trump-affect-finances/?xid=frommoney_soc_socialflow_twitter_money

Some interesting points brought out in this article:

Performance assumptions about how certain sectors will perform based upon Presidential policy quite often go contrary to popular belief.

Visualize history, not your worst fears. Reminding yourself that the S&P 500 has finished up in more than two-thirds of all calendar years since 1926, a period that’s seen eight Republican and seven Democratic Presidents.

Stay away from “Confirmation Bias”, in which investors seek out only information that reinforces their worldview. On March 6, 2009 Stanford Professor Michael Boskin argued that Obama’s policies, marked by higher spending, taxes, and regulations were “killing the Dow”. If you were already fearful, you might have let this warning send you to the sidelines, and you would have missed out on more than 11,000 Dow points.

The President is not a dictator. Just because he or she runs on a platform, it doesn’t mean that agenda
will be put in place. The real economy may not cooperate. A perfect example is President Obama’s push for reducing greenhouse-gas emissions by curbing the country’s reliance on fossil fuels. Yet major advancements in technology to extract petroleum from shale formations led to a doubling of U.S. crude oil production during his watch. Clean energy stocks have been down 47% under Obama as well.

“It’s the economy, stupid”. The average economic expansion over the last 150 years lasts about 39 months. The current upturn which began in June 2009, is now in its 88th month, making it the fourth longest since the Civil War. This means that Trump or Clinton is likely to confront a recession early in his or her
administration. Bull markets have a finite life, about 4 ½ years on average. This one is already more than seven years old. Recessions are part of a normal business cycle, and market downturns are part of the normal investment cycle. These factors are taken into account when we design and implement an investment strategy for our clients by utilizing a series of traditionally uncorrelated assets that often fare well in market
downturns.

The bottom line to all of this is any attempt to try and adjust portfolios around the election is a historical exercise in futility. “Market-Timing” is a very common investor mistake and is impossible to get right on a consistent basis as it entails repeating a relatively precise exit and entrance strategy. Additionally, such attempts can impair a portfolios trading costs and tax efficiencies.

History has shown that simply riding through these periods of uncertainty or heightened volatility are the best plans of action to realizing longer term goals and ensuring that you are not sitting on the sidelines during a potential future market rally. Studies have shown that people simply place too much emphasis on recent events and disregard long-term realities. It is not long ago that we had the worst financial crises in 70 years, and it was in the past couple of years where we had short term "panic" over Ebola outbreaks, lack of growth in China, and so on, and before you know it, those events are in the rear view mirror.

Sincerely,

Brian Cohen, CCO; email: brian@landmarkwealthmgmt.com; phone: 631-923-2487

Chris Congema, CFP® email: chris@landmarkwealthmgmt.com; phone: 631-923-2486

Joe Favorito, CFP®; email: jfavorito@landmarkwealthmgmt.com; phone: 631-930-5336

Direct office email: info@landmarkwealthmgmt.com

Direct phone: 631-923-2485

Landmark Wealth Management, LLC (www.landmarkwealthmgmt.com). The firm is located at 900 Walt
Whitman Road, Suite 208 in Melville.

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This communication is from Brian Cohen, Chris Congema, CFP®, and Joe Favorito, CFP®, financial advisors at Landmark Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisory firm. The information in this blog is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.